Jones Act: Five House Reps Introduce Resolution Urging Reform 

by Michael Hansen, Hawaii Shippers Council

A bipartisan group of five Hawaii State Representatives introduced in the current session a pair of resolutions calling on the U.S. Congress to enact reform legislation liberalizing the national build requirement of the Jones Act for deep draft ships operating the Hawaii and other noncontiguous domestic trades.

The companion resolutions, House Concurrent Resolution 150 (HCR 150) and House Resolution 119 (HR119), were introduced on March 13, 2013, and are both entitled, “Requesting Congress To Exempt The Noncontiguous Domestic Trades of Alaska, Hawaii, and Puerto Rico From the United States Build Requirement of the Jones Act for Large Oceangoing Ships”

The reform proposed by the resolutions would not alter the other key Jones Act vessel requirements in respect of the noncontiguous trades, i.e., the U.S.-flag, U.S.-ownership and U.S.-crew provisions. Neither would it change in any way the current application of the Jones Act to those domestic waterborne trades exclusive to the 48 contiguous states.

The purpose of the resolutions is to demonstrate that the State of Hawaii supports the limited noncontiguous trades Jones Act reform described therein.  Adoption of the resolutions by the Hawaii State Legislature will send a message to Congress and encourage it’s members to enact federal legislation to achieve Jones Act reform.

The five introducers of the measure are as follows:

• Representative Gene Ward (R), Minority Leader Emeritus, 17th House District – Kalama Valley, Queen’s Gate & Hawaii Kai
• Representative Lauren Kealohilani Cheape (R), Minority Whip, 45th House District – Mililani, Schofield & Kunia
• Representative John M. Mizuno (D), Vice Speaker, 28th House District – Kamehameha Heights & Kalihi Valley
• Representative Cindy Evans (D), Chair, Committee on Water and Land, 7th House District – Kaupulehu, Waimea & Halaula
• Representative Clift Tsuji (D), Chair, Economic Development & Business Affairs, 2nd House District – Hilo, Waiakea & Keaukaha

The lead sponsor of the measures, Rep Ward, issued a press release on March 18, 2013, announcing introduction of the measure and extending an invitation to the legislatures of Alaska, Guam and Puerto Rico to consider similar measures of their own.

We would encourage the three other legislatures to follow Rep Ward’s suggestion and join Hawaii with similar resolutions of their own.  Together those resolutions would send a clear message to Congress that all the noncontiguous jurisdictions support the same Jones Act reform.

The Hawaii Shippers Council strongly supports Resolutions HCR 150 and HR 119, and kindly asks you to join with us in support of the measures. 

The limited reform of the Jones Act proposed by the resolutions addresses the extremely high cost of constructing large ships in the United States, which is the major cost driver in the deep draft noncontiguous trades.  The cost of building a large ship in the United States today can be five times greater than in Japan, South Korea and China, where more than 90% of the world’s oceangoing ships are now constructed.

Allowing domestic shipowners to acquire mainline cargo ships from the major Asian shipbuilding yards for 20% of the cost in the U.S. for comparable ships will dramatically change the economics of the noncontiguous trades.  The proposed reform would substantially reduce the mainline ocean carrier’s capital costs, by lowering the acquisition cost of their primary assets -- oceangoing ships.  This will effectively lower the barriers to entry into and increase the contestability of these trades.  This will put considerable competitive pressures on the incumbent carriers.

The proposed reform will create significant economic benefits that will flow through the system to businesses and consumers in Hawaii and other noncontiguous jurisdictions.  As a result, the reform would reduce the cost of goods and petroleum products to residents in the noncontiguous jurisdictions.

Please contact your Hawaii State House Representative and let them know you support the resolutions and wish to have them heard by the appropriate House committee(s).  Also, you may wish to thank the representatives named above who introduced the resolutions.

If you are a Hawaii resident and don’t know who your representative is, the Hawaii State Legislature website has a search function in the upper right hand corner “find your legislator” where you simply enter the name of your residential street.  You can also find the contact information for any Hawaii State legislator on the website, regardless whether you are a state resident or not.

Once hearings are announced, we will let you know when and where to submit your written testimony.

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Related: Sen Solomon Resolutions Urge Hawaii Jones Act Exemption